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Let Ryan Campbell help you determine if you can get rid of your PMI
It's largely known that a 20% down payment is accepted when purchasing a home.
The lender's risk is usually only the difference between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser defaults.
The market was working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom.
A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI guards the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI is pricey to a borrower.
It's lucrative for the lender because they acquire the money, and they get the money if the borrower doesn't pay, different from a piggyback loan where the lender takes in all the losses.
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The savings from cancelling your PMI will make up for the price of the appraisal in no time. Ryan Campbell are experts when it comes to value trends in the city of Gilbert and Maricopa County. Contact us today.
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How can a homeowner avoid paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount.
The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, wise home owners can get off the hook sooner than expected.
Considering it can take a significant number of years to get to the point where the principal is only 80% of the initial amount of the loan, it's necessary to know how your Arizona home has grown in value.
After all, all of the appreciation you've accomplished over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark?
Your neighborhood might not conform to national trends and/or your home could have acquired equity before the economy declined. So even when nationwide trends forecast falling home values, you should know most importantly that real estate is local.
A certified, Arizona licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know.
It's an appraiser's job to know the market dynamics of their area.
At Ryan Campbell, we're masters at pinpointing value trends in Gilbert, Maricopa County, and surrounding areas, and we know when property values have risen or declined.
When faced with information from an appraiser, the mortgage company will usually remove the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
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The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Ryan Campbell is in the business of tracking value trends in Gilbert and Maricopa County. Contact us today.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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